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HollyFrontier’s Earnings to Fall by 23% YoY in Q1

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Apr. 4 2019, Published 8:45 a.m. ET

Peer comparison

Here we’ll look at earnings estimates for HollyFrontier (HFC). Marathon Petroleum (MPC) is expected to post a rise in earnings in the quarter. Phillips 66 (PSX) and Valero Energy’s (VLO) earnings could fall by 21% YoY and 56% YoY, respectively, in Q1.

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HollyFrontier’s Q1 2019 estimates

According to Wall Street analysts, HollyFrontier is estimated to post EPS of $0.59 in Q1 2019, which is 23% lower than its Q1 2018 adjusted EPS. Also, it is 74% lower than Q4 2018 adjusted EPS. HollyFrontier’s revenues are estimated to be around $3.4 billion in Q1 2019, about 19% lower than revenues in Q1 2018.

HollyFrontier’s refining margins could fall in the first quarter due to weaker refining conditions year-over-year in its main operating regions, Midcon and Rockies. However, in the Southwest, the index value rose year-over-year in Q1 2019. Midcon accounted for 57% of the company’s total crude throughput in 2018. The refining index value in Midcon fell from $15.6 per barrel in Q1 2018 to $14.7 per barrel in Q1 2019.

Overall, regional index values suggest that HollyFrontier’s refining margin could fall year-over-year led by a lower Midcon and Rockies margin partly offset by a higher Southwest margin in the first quarter.

Further, RINs (renewable identification numbers) prices have declined in the quarter, which could bring respite from compliance costs. Also, HFC’s lubricants and midstream segments could support the company’s earnings in Q1 2019.

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